Wednesday, September 17, 2008

National Laws, Global Markets

Politicians claim they want to protect workers from exploitation, consumers from danger, and middle-class investors from fraud. And they want America to continue to have the world's highest corporate tax rates. In the past couple of days, both Barack Obama and John McCain have called for greater regulation of Wall Street.

But workplace, accounting, and tax code regulations impose compliance costs. Companies have to hire lawyers and accountants to sort them all out. These costs are added to the price the consumer ultimately has to pay. Likewise, the income taxes corporations pay are built into the cost of the product that consumers pay.

Is it surprising, then, that foreign imported goods, which may have to pass inspection but are otherwise exempt from these regulations and taxes, have lower prices?